Does the All States M.E.D. franchise agreement establish an agency relationship between the franchisee and franchisor?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
This Agreement is purely a contractual relationship between the parties and does not appoint or make Franchisee an agent, legal representative, joint-venturer, partner, employee, servant, or independent contractor of Franchisor for any purpose whatsoever. Franchisee may not represent or imply to third parties that Franchisee is an agent of Franchisor, and Franchisee is in no way authorized to make any contract, agreement, warranty, or representation on behalf of Franchisor, or to create any obligation, express or implied, on Franchisor's behalf. During the term of this Agreement, and any extension or renewal hereof, Franchisee shall hold itself out to the public only as a franchisee and an owner of the Franchised Business operating the Franchised Business according to a franchise from Franchisor. Franchisee shall take such affirmative action as may be necessary to do so including, without limitation, exhibiting a notice of that fact in a conspicuous place on all forms, stationery or other written materials, the content of which Franchisor has the right to specify. Under no circumstances shall Franchisor be liable for any act, omission, contract, debt, nor any other obligation of Franchisee. Franchisor shall in no way be responsible for any injuries to persons or property resulting from the operation of the Franchised Business by Franchisee. Any third-party contractors and vendors retained by Franchisee to convert or construct the premises are independent contractors of Franchisee alone.
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to the 2024 All States M.E.D. Franchise Disclosure Document, the franchise agreement explicitly states that the relationship between the franchisor and franchisee is purely contractual and does not establish an agency relationship. The agreement specifies that the franchisee is not appointed as an agent, legal representative, joint-venturer, partner, employee, servant, or independent contractor of All States M.E.D. for any purpose. This means the franchisee does not have the authority to act on behalf of All States M.E.D. or bind the franchisor to any obligations.
All States M.E.D. franchisees are required to present themselves to the public solely as franchisees and owners of the franchised business, operating under a franchise granted by All States M.E.D. Franchisees must take necessary actions to ensure this distinction is clear, including displaying a notice of their franchisee status on all forms, stationery, and written materials, with the content of such notice subject to All States M.E.D.'s approval. This requirement aims to prevent any confusion among customers or other parties regarding the franchisee's independent status.
The franchise agreement makes it clear that All States M.E.D. is not liable for any actions, omissions, contracts, debts, or other obligations of the franchisee. Additionally, All States M.E.D. is not responsible for any injuries to persons or property resulting from the franchisee's operation of the franchised business. Any third-party contractors or vendors hired by the franchisee for premises conversion or construction are considered independent contractors solely of the franchisee. This reinforces the arms-length nature of the franchise relationship and the franchisee's responsibility for their own business operations.